The City Affairs Coalition is suing certainly one of its subcontractors in federal court docket for defamation and revealing commerce secrets and techniques, after she alleged its executives turned a blind eye to misspending of presidency grant funding.
UAC runs homeless shelters and different packages for the town of Philadelphia, and serves as an umbrella group for greater than 50 smaller nonprofits. It’s asking a federal decide to bar software program guide Karen Nicholson from disparaging it and is demanding not less than $150,000 in damages.
UAC filed the lawsuit Could 5. It comes after Nicholson spent greater than a 12 months making on-line posts and submitting complaints with authorities companies associated to her declare that she is owed $35,000 for software program work she did for UAC, plus extra compensation she alleges was skimmed from her paychecks.
Nicholson, who is predicated in Ohio, was employed and paid by a contractor for UAC. She says he fired her in August 2023, after she complained about her paycheck bouncing.
She says she later discovered proof that the contractor skimmed lots of of hundreds of {dollars} that ought to have gone to her and different employees. She alleges that UAC ought to compensate her for what she’s owed and may have been a greater steward of the hundreds of thousands of {dollars} in public funds it manages.
She additionally factors out that the contractor, Delaware software program firm proprietor Jacques Latoison, has been sued repeatedly over the previous decade for unpaid native, state and federal taxes.
“It boggles the thoughts that our tax {dollars} are given to a tax cheat, and all people is aware of it, and nothing will be performed,” Nicholson stated in an interview. “City Affairs was accountable to guarantee that they didn’t give cash to any individual irresponsible.”
An City Affairs Coalition spokesperson stated any dispute Nicholson has is with Latoison, not UAC, and her claims are with out advantage.
“She has launched a smear marketing campaign based mostly on demonstrably false and defamatory allegations,” spokesperson Anthony Campisi stated. “This contains creating a web site containing stolen and misrepresented info and contacting members of the media in an try to unfold these falsehoods.”
Latoison didn’t reply to requests for remark.
A storied historical past, and former complaints
Nicholson stated she went after the City Affairs Coalition partially as a result of she believes Latoison has no cash to compensate her, and since she was a de facto UAC worker. She says she hardly ever had direct contact with the contractor and primarily reported to 2 UAC executives.
The group she’s concentrating on is politically outstanding and has a storied historical past. Fashioned in 1969 by Philadelphia neighborhood leaders to coordinate funding in Black and different deprived communities, it celebrated its fifty fifth anniversary in November with a banquet on the Pennsylvania Conference Heart that drew practically 1,000 attendees. They included Mayor Cherelle Parker, who obtained an award, and keynote speaker Gov. Josh Shapiro, the Philadelphia Tribune reported.
UAC now calls itself “A Residence for Nonprofits” and says it serves as a fiscal sponsor for greater than 50 organizations. Meaning it primarily absorbs them, manages their grant funding, personnel issues, authorized affairs and taxes, and collects charges for offering these companies.
It additionally helps launch new nonprofits, administers grant packages for metropolis companies, runs a summer season youth employment program, and provides away turkeys at Thanksgiving, amongst different initiatives. The group’s packages have been budgeted to obtain $19.2 million from the town over the previous 12 months, together with $6.2 million to supervise homeless shelters and $5 million for the Group Disaster Intervention Challenge, an anti-violence program.
By means of its Financial Growth Initiatives (EDP) division, UAC additionally earns income by monitoring contractor variety on tasks at most of the metropolis’s most outstanding establishments and companies, reminiscent of Youngsters’s Hospital of Philadelphia, the Philadelphia Museum of Artwork, SEPTA, and the college district. It’s usually employed to gather information exhibiting the organizations are assembly authorities grant necessities, and is paid for that work with public {dollars}.
UAC reported receiving $144 million in grants and different revenues in 2021 and $74 million in 2022. The EDP division has through the years helped handle tasks price greater than $9 billion, in line with its web site. Together with employees on the nonprofits it manages, UAC has greater than 500 workers.
The group has beforehand confronted scrutiny over its monetary affairs. In 2012, the state Inspector Basic concluded it might have mismanaged $1.5 million in grants, and the funding was frozen, the Inquirer reported.
Extra just lately, UAC was the topic of a federal class motion lawsuit alleging it broke the regulation by not paying time beyond regulation to workers in an anti-violence program it oversaw. The group denied any wrongdoing, however in 2023 agreed to pay $380,000 in a settlement involving 100 employees.
Lagging fee and alleged discrimination
Nicholson stated she was employed by Latoison in November 2021 to maneuver 20 years of UAC’s monetary information into Oracle NetSuite, its new enterprise software program system. In accordance with her account and to emails she offered, she was carefully supervised by UAC govt Kevin Satterthwaite and EDP deputy director Carlos Jones, who heads EDP.
Satterthwaite ceaselessly emailed and phoned her, together with on evenings and weekends, and he or she was in fixed e-mail contact with Vanessa Cheeseborough, an administrator who labored below Jones, Nicholson stated.
But she despatched her invoices to Latoison, who has a Chester, Pa.-based firm referred to as The Hierarchy that has been working UAC’s e-mail and purposes servers since not less than 2008, in line with information offered by Nicholson. In any other case she hardly ever spoke with him, she stated.
The association initially labored, however she alleges Latoison started taking longer and longer to pay her. By February 2022 it was taking practically two months for her to obtain her paychecks. He informed her he was ready for cash from UAC, she says, so she checked with Cheeseborough.
“She stated, ‘He’s a liar, we pay him each seven days. He’s been sitting on the cash,’ ” Nicholson stated.
She additionally found she was being paid a lot lower than some Black male workers doing comparable work for Latoison and UAC, she stated. When she complained concerning the late funds, Latoison informed her that “minorities have to pay their payments earlier than whites,” stated he “hated Caucasians,” and made different abusive feedback, in line with an EEOC criticism filed by Nicholson’s legal professional.
When she informed Cheeseborough and Jones about Latoison’s apparently discriminatory habits, they stated Latoison had been “doing this for years,” per the EEOC criticism. Cheeseborough talked about that ladies who beforehand complained about him have been “in the end ‘pressured out’” of UAC for doing so, Nicholson stated within the authorized submitting.
A historical past of dodging taxes
Nicholson says she continued doing her work, placing in 60 to 75 hours every week, and finally getting paid.
However in April 2023 her paycheck bounced and Latoison informed her his firm was having tax compliance issues, she stated. “We’re in court docket with the feds from the IRS,” he stated, in line with Nicholson. “Kevin helps me transfer cash round into an account so I pays you.”
Nicholson stated Latoison’s firm has earned $4 million from UAC since 2013, a lot of it in the end coming from federal grants which can be channeled by way of the town of Philadelphia, in line with billing information she analyzed.
However regardless of these earnings, he has a protracted historical past of not paying taxes on his earnings.
In 2015, the town of Philadelphia filed a Municipal Courtroom criticism alleging The Hierarchy hadn’t filed Enterprise Earnings and Receipts Tax returns for 4 years. On the time, any firm that did enterprise in Philadelphia needed to file a return, even when it didn’t make a revenue.
Town received a $10,000 judgment, which it was nonetheless attempting to gather in 2020. Metropolis officers couldn’t focus on the standing of the case due to state confidentiality legal guidelines, a Income Division spokesperson stated.
In Delaware, the place Latoison lives, the state Division of Income has received not less than eight court docket judgments towards him since 2005, totaling practically $48,000.
Public information from New Citadel County present 11 federal tax liens towards him over the identical interval, the latest from January 2023. One lien, for taxes due in 2017, confirmed him owing $64,319, whereas one other from 2018 was for $41,596.
Accusations of inflated billing
In summer season 2023, Nicholson contacted Cheeseborough and requested to talk straight with Jones, one of many UAC executives who supervised her work, she stated. He was shocked to listen to Latoison hadn’t paid her in months, and didn’t imagine her conclusion that the contractor was pocketing the cash he’d been given by UAC to compensate her, she stated.
Jones stated, “What are you speaking about? I’ve been pals with Jacques for 20 years, and he would by no means steal cash,” in line with Nicholson.
Jones despatched her monetary information exhibiting UAC had deposited the complete quantity she was owed into Latoison’s checking account, she stated. However she was not receiving the funds.
Jones informed her he must do a “legal investigation” of Latoison’s dealing with of the cash, and requested her to not focus on the matter with anybody, she stated. “He stated, if I can get him to offer you your paycheck, will you be quiet?” Nicholson recalled. He promised she wasn’t being fired, she stated.
Nicholson “was an [UAC] worker anyway,” Jones informed her, in line with her EEOC criticism.
He had his assistant contact her, utilizing a Gmail account relatively than an organization e-mail account, to ensure he had all of the reporting on her present work tasks, she stated. Shortly thereafter, Latoison fired her.
Within the two years since, she’s spent many hours sorting by way of Hierarchy and UAC monetary databases, attempting to know their relationship.
Along with dealing with e-mail and different technical companies, Latoison served as a payroll processor for her and for various others concerned in UAC tasks, together with youth collaborating in sure work packages.
Nicholson says she finally found that Latoison had been routinely rounding up worker hours earlier than he forwarded timesheets to UAC, including fictional work hours, and billing UAC at greater charges than workers have been paid out. For instance, UAC was giving him $90 for every hour she labored, whereas paying her $55 and pocketing the distinction, she says.
He additionally billed UAC for the entire hours she labored — which regularly reached 70 hours or extra per week — however solely paid her for 40 hours and saved the remainder of the cash himself, she alleges.
She stated Latoison raked in $191,000 for doing little greater than sending her timesheets to UAC. “Actually, I entered my very own time, and all he needed to do was press a button,” she stated.
State and federal inquiries proceed
Nicholson has pursued a number of avenues to attempt to stress Latoison or UAC to compensate her for what she says she’s owed.
She handed on info to a Delaware Division of Income investigator who was pursuing Latoison for unpaid taxes, she stated. She filed a wage theft criticism with the town of Philadelphia, which she stated went uninvestigated, and contacted the Pennsylvania Division of Labor, which she stated declined to become involved as a result of she’s based mostly in one other state.
She concluded that suing Latoison can be a waste of time, she stated, as a result of he probably has no cash to pay her if she received a court docket case. As an alternative, she stated, she’s specializing in UAC and its accountability as her de facto employer.
Within the formal criticism her lawyer filed with the EEOC, she alleged that UAC knowingly allowed Latoison to underpay her and discriminate towards her. At one level, an EEOC investigator informed a UAC lawyer, “I don’t see any proof that displays [Nicholson] didn’t work for [UAC],” in line with a letter Nicholson obtained by way of a Freedom of Info request.
However the company in the end determined to not sue UAC, for causes that weren’t specified, and as an alternative issued a normal letter saying she had a proper to sue on her personal.
Her hopes now lie partially with a division of the Pennsylvania Division of State that oversees charities. It has investigated her criticism towards UAC and is contemplating whether or not to hunt administrative penalties or in any other case prosecute the case. Nonetheless, a spokesperson stated the company doesn’t have the authority to require restitution to workers. Nicholson additionally just lately filed an analogous criticism with Ohio’s legal professional normal.
She has corresponded with a U.S. Division of Labor investigator about her pay criticism, and about points associated to UAC’s fee of youth employees on a undertaking involving the Philadelphia Youth Community, in line with emails she offered.
She’s been holding off on suing UAC within the hope that the U.S. Division of Labor finally goes after them, because it has performed beforehand with firms accused of misclassifying or underpaying employees. She’s additionally contacted UAC’s insurer in an effort to gather the allegedly withheld funds.